I can’t believe I’m at the stage of life where I’m starting to think about retirement planing. While I can’t draw social security until 62, I’m putting no weight into living on social security. Instead, I’m looking at alternative funding options for my retirement. As a self-employed, single person, I have a few unique challenges for retirement. And while life can change and alter my plans, I’m working feverishly to set myself up for success in retirement.
The Downside To Being Self-Employed
Unlike many salaried positions, as a self-employed individual, I do not have company pension, 401K, or benefits. What that means is that any retirement financial planning that I do is done solely by me and not matched by an employer. While there are many perks to being self-employed, the benefits “program” is certainly not one of them! I’m sure many of you self-employed people can relate. For many, however, they plan to rely on their spouse’s retirement plan that was not self-employed. However, as a single person, that is not an option available to me.
My Retirement Planning Goals
I recently polled my Instagram followers, & I asked what financial goals they had prior to retirement. By & large, the number one answer was to be debt free and/or pay off their mortgage. In fact 25% of adults expect to die with debt. Isn’t that crazy? I’m like the majority of my Instagram followers, my number one goal prior to retirement is to be debt free. Currently (thankfully), my only debt is my house. Realistically, I could have that paid off in the next few years; however, I’m not trying to pay it down that fast- yet! Instead my goals for retirement are:
- Have no mortgages
- Have passive income
- Have $0 debt
- Have multiple real estate investments
- Have substantial cash investments (mutual funds, stock markets, etc)
Retirement Planning: Real Estate Investments
Obviously, my current strategy involves house flipping. However, I do not plan to flip houses until I retire. The benefit of house flipping is a lot of cash fast; however, that’s not always the best strategy for long-term wealth building. Instead, it’s helping me reach my goal of buying a house in Florida. I’ve debated using my current cash reserves to purchase in Florida, or utilize those reserves to purchase other investment properties here in Arkansas that will appreciate, and then sell down the road to purchase the Florida house. To be honest, I still don’t know for sure which route I’ll go.
But at some point, my retirement planning includes transitioning out of house flipping and into rentals. While I’m not excited about the headaches that come with rentals, I do know they can be a blessing in a recession and a tool to passive income in retirement. My real estate investment plan is:
- Transition out of house flipping in the next 5-10 years
- Purchase a portfolio of rentals that cash flows equal to my current “salary”
- When it comes time to purchase a Florida home, I plan to cash out of some of those rentals to pay for the home.
- Use my actual salary (rather than rental income) to pay down my mortgages.
When I Plan To Retire
I don’t plan to ever retire from real estate. It’s easy enough to keep my broker’s license active & it benefits my personal transactions, so I will always be a Realtor. I plan to retire from house flipping in the next 5-10 years. It’s intense, stressful work, and I don’t always want to live that lifestyle– but for now, it works.
As I approach my late forties and fifties, I want to be in a position where I don’t have to work. However, I’m not the type to not work. I would like to have a lifestyle funded that allows me to see help people buy/sell properties without the intensity of finding new clients, marketing, etc. that comes with the beginning of a real estate career.
Once I get my Florida house purchased, I plan to live dually between Arkanas & Florida. I have no idea when I’ll move to Florida full time, but that is the ultimate goal.
As you might guess, my retirement planning investment strategy is heavy on real estate investing. The returns on my investments in real estate have been far more than if I had invested that money in a mutual fund. And while I know the stock market can produce bigger returns, it can also take your shirt if you don’t know what you’re doing. My biggest philosophy is
Invest in what you know.”
I know real estate. I know how to hedge my bets and protect myself. All of my investments are ones I feel confident in because I know the market, I know the outlook, and I know what I can get in return. I don’t know that about the stock market.
That being said, I will have cash outs from properties, and while I could do a 10-31 exchange, that isn’t always going to be the best option. As my dad says with a 10-31: You aren’t delaying the gain. You’re delaying the pain [of owing]. I currently don’t have a Roth IRA (mainly because I hate having my money tied up and not liquid), and at this point, I’m more apt to not tie up my funds in a Roth because it could prevent me funding future investments; however, I do plan to begin investing in Roths before I’m 40 in the next 4 years.
What I Want My Retirement To Look Like
For me, retirement doesn’t mean not working. Instead, retirement looks like freedom. As I approach retirement, I want to be “snowbirding” in Florida, and to be completely transitioned out of house flipping. The biggest thing I hope to incorporate more of in my retirement is travel. When I actually retire I plan to:
- Keep my real estate license & get licensed in Florida as well
- I’m really exploring working as a travel agent in my retirement. It’s a fun way to explore the world (for “work”) and help my friends & family do the same.
- Have a home in Florida & Arkansas
- As I transition to more full time living in Florida, I’ll most likely sell off my rental properties to fund retirement.
- I want to have a community of people/friends in not only Arkansas but Florida. It’s my goal that both feel like home to me!
- I plan to work until I die. Not because I have to, but I’m not an idle person. Whether that’s being a Realtor or my “2nd act” as a travel agent or whatever, I want to keep working because I enjoy what work brings to my life.
- Volunteer at charities and places that have special meaning to me.
Most people in their mid-thirties probably aren’t planning their retirement as feverishly as I am. But for me, I always feel more urgency knowing it all rests on me– there isn’t a spouse’s income/retirement to fall back on. I’m also a planner by heart (Type 1 enneagram!), so I like to plan way ahead– and prepare for the bumps in the road. If you haven’t started your retirement planning, I would strongly encourage you to sit down with a financial planner, investor, or banker to go over your options!